Mortgage lending hits highest ever figure

Gross mortgage lending reached record figures in June but the number of approvals fell sharply.

Gross mortgage lending reached record figures in June but the number of approvals fell sharply.

Despite the value of mortgage lending hitting £21.5 billion, mortgage approvals for all purposes plunged by eight per cent year-on-year.

More specifically, house purchase approvals slumped by 11 per cent in number but increased by three per cent in value.

"Although the trend in net mortgage lending is being maintained, approval numbers for house purchase are well down on this time last year, suggesting that market demand may be reacting to higher mortgage costs," said David Dooks from the British Bankers' Association (BBA).

The figures point to sharply decreasing affordability levels in the UK and the average mortgage amount supports this.

According to the BBA, the average approved loan for house purchase was £159,600, an increase of 16 per cent compared to the figure recorded in June 2006.

With many experts predicting that the Bank of England will increase the base rate to six per cent in the coming months, affordability looks set to decrease further.